ASGN’s first quarter results reflected a challenging business environment, with the market responding negatively to signs of revenue and margin pressure. Management pointed to ongoing macro uncertainty and more cautious client IT spending, particularly as the quarter progressed. CEO Ted Hanson noted, “This improvement in confidence faded as the quarter progressed, but clients remain cautious about increasing their IT spending.” Revenue mix shifted further toward higher-margin consulting, but overall sales still declined year over year. The company’s variable cost structure and focus on high-value IT solutions helped stabilize gross margins, yet operating leverage was limited due to lower volumes and higher SG&A expenses, including one-time costs.
Is now the time to buy ASGN? Find out in our full research report (it’s free).
ASGN (ASGN) Q1 CY2025 Highlights:
- Revenue: $968.3 million vs analyst estimates of $962.3 million (7.7% year-on-year decline, 0.6% beat)
- Adjusted EPS: $0.92 vs analyst expectations of $0.95 (2.6% miss)
- Adjusted EBITDA: $93.6 million vs analyst estimates of $94.58 million (9.7% margin, 1% miss)
- Revenue Guidance for Q2 CY2025 is $1 billion at the midpoint, below analyst estimates of $1.01 billion
- Adjusted EPS guidance for Q2 CY2025 is $1.09 at the midpoint, below analyst estimates of $1.25
- EBITDA guidance for Q2 CY2025 is $104.5 million at the midpoint, below analyst estimates of $112.5 million
- Operating Margin: 4.8%, down from 6.8% in the same quarter last year
- Market Capitalization: $2.16 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions ASGN’s Q1 Earnings Call
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Tobey Sommer (Truist Securities) asked about the mix of new versus renewal bookings. CEO Ted Hanson replied that renewals still outpace new work, but new project momentum is progressing steadily without major changes in recent trends.
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Mark Marcon (Baird) questioned how gross margins have held up and what drives margin expansion. Hanson attributed improvement to a higher consulting mix and margin-rich services like AI and Workday, while also highlighting the company’s variable cost structure.
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Kevin McVeigh (UBS) inquired about the financial impact of the TopBloc acquisition and DOGE’s ongoing effects. Hanson described TopBloc’s initial contribution as limited due to timing, while Executive Vice Chairman Rand Blazer said DOGE will continue to influence government spending decisions.
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Trevor Romeo (William Blair) asked how the guidance incorporates uncertainty at the segment level. CFO Marie Perry responded that guidance is consolidated, with less than 2% total revenue impact from DOGE and stability in revenue per billable day.
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Surinder Thind (Jefferies) sought clarity on visibility and project delays. Hanson and Blazer described client caution as broad-based across both commercial and federal segments, prompting a wider guidance range but no major change in new project starts or cancellations.
Catalysts in Upcoming Quarters
In the coming quarters, our team will closely watch (1) the pace and profitability of consulting-led revenue growth, especially as clients prioritize AI and automation projects; (2) the integration and scaling of TopBloc’s Workday services within ASGN’s broader offerings; and (3) the evolution of federal government cost-cutting initiatives and their effect on project pipelines. Continued margin stabilization and SG&A discipline will also be important markers of execution.
ASGN currently trades at $49.26, down from $58.50 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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